Category Archives: HP

As the Department for Work and Pensions continues its long and costly legal battle to stop four Universal Credit reports being published, the all-party Public Accounts Committee says a lack of openness “remains within the Department”.

The PAC says in a report published today “Universal Credit: progress update”

“… a lack of openness remains within the Department, as does an unwillingness to face up to past failings.

“The Department refused to accept the extent of previous failings, despite the overwhelming evidence we heard last year that the programme’s management had been extraordinarily poor prior to the reset, and the small numbers claiming Universal Credit.

“Furthermore, since early 2012, the Department has been fighting a protracted legal case to prevent the publication of documents relating to the management of Universal Credit…”

The DWP is refusing to release four Universal Credit reports requested under FOI.

Three of the reports from 2012 – the risks register, issues register and milestone schedule – were requested by programme and project management professional John Slater. I requested a project assessment review of the Universal Credit programme, as carried out by the Cabinet Office’s Major Projects Authority.

When questioned by Margaret Hodge, chair of the PAC, Robert Devereux, the DWP’s Permanent Secretary, suggested that his officials did not publish the reports because similar reports in other departments were also unpublished.

Meanwhile the DWP is pouring public money into various legal appeals related to its refusal to publish the reports. The DWP’s lawyers argue that publishing the four reports would have a “chilling effect”. They say officials need continued confidentiality to be candid about risks and problems.

A counter argument – though not yet one made in any of the legal hearings so far – is that civil servants and consultants writing the reports are writing them for other civil servants and consultants and are more deferential in their findings than they would be if the reports were open to public and Parliamentary scrutiny.

The PAC’s latest report on Universal Credit highlights the many uncertainties that surround the programme’s delivery.

After a total spend of about £700m on the Universal Credit programme so far the Committee questions what has really been gained. It says:

“The Department must set out clearly what it has really gained from its spending so far, including from the piloting of the programme, and from the investment in live service IT systems.”

Fewer than one per cent of the potential claimants are currently claiming Universal Credit although the programme has been in live operation since April 2013.

The DWP says it is going slowly and cautiously but the PAC’s report raises questions about whether the programme, as it is being delivered by the DWP’s major suppliers, will ever be affordable or technically feasible given the amount of manual intervention required.

A separate, far cheaper “digital” solution, which is being built on agile principles, is being trialled in Sutton, South London. It may offer more hope of successful, affordable delivery than the existing “live service” currently being rolled out. The live service from the DWP’s major suppliers mixes new coding, legacy systems and manual calculations. It has cost £344m so far. The digital solution has cost less than £5m so far.

Comment

Who has the final say on whether the four Universal Credit reports are published – the Department for Work and Pensions or the all-party Public Accounts Committee? Clearly it’s the DWP’s civil servants.

MPs are powerless to force publication of the reports.

What does this say about the ability of MPs to make the most senior civil servants more open than they want to be?

Figures published yesterday on gov.uk show that the number of successful Universal Credit claims remains low.

It means the IT that is being designed to handle millions of claims has had only a relatively small number of actual claims to test it. The small number is because eligibility to claim is being kept narrow. Most successful claimants are single people with no children, are not on other benefits, and have straightforward claims.

Yesterday’s figures show that 35,620 of the people who have made a claim have, up to 8th January 2015, attended an initial interview and gone on to start Universal Credit.

This compares with 30,850 the previous month.

The figures were collected at a time Universal Credit was available within 96 Jobcentre Plus offices – about one in eight.

Universal Credit was rolled out to the whole of the North West of England on 15th December 2014. It is being rolled out to all Jobcentre Plus offices and local authorities across the country from 16th February 2015.

Robust?

The signs are that the IT being used to roll out Universal Credit is not as robust as claimed by the DWP.

One claimant who featured in a Government film about Universal Credit said later it is riddled with computer problems. In the DWP film, Daniel Pacey said Universal Credit helped him find work and was far better than jobseeker’s allowance.

Now Pacey, aged 24, says his jobcentre struggled with failing computer systems, according to BBC Inside Out North West. A DWP spokesman told the BBC:

“The IT system adapts smoothly to claims as they become more complex, which we have already seen across the North West.

“Computer problems in offices are separate issues and are resolved quickly but these do not impact the operating system, or have an impact on claims.”

Comment

The DWP is right to be going slowly and cautiously with the Universal Credit roll out, especially as the IT seems to be less than robust.

What’s less understandable is that the DWP and IDS have trumpeted this week the start of a national roll out of Universal Credit – including more complex cases – as if this will prove that the system works.

How can anyone know whether the system works when so few people are being allowed to claim?

The DWP is refusing to publish its internal reports on the progress or otherwise of the Universal Credit IT programme.

Can IDS really expect his announcements on Universal Credit’s success to be credible when his department is keeping one side of the story hidden from public view?

The “good news” headlines over the weekend suggest that Universal Credit is finally rolling out nationally, the implementation problems having been ironed out.

But do senior officials at the Department for Work and Pensions know themselves whether the IT will ever work at scale, handling millions of UC claims?

The national roll out begins today (16 February 2015) says a brochure on the success of the programme “Universal Credit at Work – Spring 2015“. It’s issued by the Department for Work and Pensions and has a foreword signed by Iain Duncan Smith and his welfare minister Lord Freud.

“Throughout the report, robust evidence shows that Universal Credit is working,” says the brochure, which adds:

“Over the last four months, the roll-out of Universal Credit has continued and from 16 February, it will be available to:
• single claimants in 112 jobcentres
• couples without children in 96 jobcentres
• families in 32 jobcentres
• all claimant types in a limited postcode area in London (Sutton) to test the enhanced Digital Service.”

Ahead of national roll out, DWP officials have been briefing the media on the success of the UC programme. Hence the headlines yesterday.

The Sunday Times declared that Universal Credit “will be operating in every jobcentre across the country by this time next year if the Conservatives remain in power, Iain Duncan Smith, the work and pensions secretary, has vowed”.

When Andrew Marr asked IDS about Universal Credit’s IT, IDS suggested that the computer systems to handle complicated claims are already in place.

Marr: “This roll-out across the country is only for single claimants, not for families, so it’s nothing like universal at this point. Do you think you have a computer system able to cope with much more complicated claims?

IDS: “Yes we have. In fact we rolled it out first in the North West where we rolled it out to singles, to couples and to families so it is now complete pretty much across the North West …

“What we are doing now is exactly what we did in the North West – roll it out stage-by-stage, so singles first, to every jobcentre by early Spring next year, and then you’ll do couples and then you’ll do families.

“And then you’ll do the final development which is digital which will allow much more things like apps on your phone.”

The reality

Is the UC programme really on track for a national roll-out? Are the concerns of the National Audit Office and the Public Accounts Committee about the slow and troubled UC programme unfounded?

The reality can be gleaned from the DWP’s plans for the roll-out, as inspected by the National Audit Office, and by documents on the gov.uk website on who is entitled – or rather who is not entitled – to claim UC during the roll-out.

It’s true that UC is being gradually extended from single claimants to couples and families, but the DWP has issued such a long list of exemptions on eligibility that numbers of claimants will continue to be tiny at least until the middle of this year (election time).

The small number of claimants will allow the DWP to continue handling more complicated claims using, in part, manual processes. This means that a fully-automated UC system to calculate benefits need not be in place for the time being.

The small number of claimants also means that the risk of implementation problems coming to public attention in the next few months is minimal.

In two days time – Wednesday 18 February 2015 – gov.uk is due to reveal the latest figures on UC take-up. As of today, the latest figures available show the total number of successful UC claimants at 30, 850 on 11 December 2014 – whereas the system needs to be able to cope with around 7-8 million claimants.

Comment

It’s good news that UC is rolling out nationally and that it’s being gradually extended to couples and families as well as single people. But the IT has not been tested properly because the numbers of eligible claimants is so small. The DWP has narrowed the band of eligibility for UC by a long list of exemptions.

You cannot claim, as a single person or a couple, if, say, you receive Jobseeker’s Allowance, Employment and Support Allowance, Income Support, Incapacity Benefit, Severe Disablement Allowance, Disability Living Allowance or Personal Independence Payment. You cannot claim if you own, or partly own, your home, or are homeless, or in supported or temporary accommodation. Many other exclusions apply.

The result is that nobody knows yet whether the main UC IT systems, and its dependent business processes and systems, will work at scale. Shouldn’t the DWP come clean on the technical and business change challenges it still faces?

UC will not be an economic proposition on the basis of the partly automated processes that exist at present. It’s possible, though, that the cheap-to-build digital systems – which are on trial in Sutton, South London – will work and will eventually take over from the mixture of legacy, new and manual systems and processes that are now in place. Nobody knows whether they will work at scale.

The reality is that the UC programme, despite years of IT coding and a spend of hundreds of millions of pounds, is still at an early stage of development. It could be at an early stage of development for several more years, even though the positive headlines at the weekend give a different impression.

It may also be worth mentioning that the UC programme has yet to gain Treasury approval for the full business case – or indeed the outline business case. There is therefore no Treasury approval for the scheme long-term funding. There are still questions to be answered over its economic feasibility.

None of this has been said by the DWP or IDS. We’ll have to wait for another National Audit Office update to know the facts.

Public Accounts Committee MPs today criticise HM Revenue and Customs for not preparing well or quickly enough for a planned switch from one main long-term IT contract to a new model of many short-duration contracts with multiple suppliers.

It’s a big and risky change in IT strategy for HMRC that could put the safe collection of the nation’s taxes at risk, say the MPs in a report “Managing and replacing the Aspire contract”.

But the Committee doesn’t much consider the benefits of switching from one large contract to smaller ones, potentially with SMEs.

Is the risk of breaking up the huge “Aspire” contract with Capgemini, and its subcontractors Fujitsu and Accenture, worth taking?

Suppliers “outmanoeuvre” HMRC

The PAC’s report makes some important points. It says that HMRC has been “outmanoeuvred by suppliers at key moments in the Aspire contract, hindering its ability to get long term value for money”.

The costs of the Aspire deal have soared, in part because of extra work. Before it merged with Customs and Excise, Inland Revenue spent about £200m a year on its IT outsourcing contract with EDS, now HP. Customs and Excise’s contract with Fujitsu cost about £100m a year.

After the Revenue and Customs merged, and a new deal was signed with Capgemini, the money spent on IT services soared to about £800m a year – arguably out of control.

HM Revenue and Customs spent £7.9bn on the Aspire contract from July 2004 to March 2014, giving a combined profit to Capgemini and Fujitsu of £1.2bn, equal to 16% of the contract value paid to these suppliers.

HMRC considers the contract to have been expensive, and pressure to find cost savings in the short-term led it to trade away important value for money controls, says the PAC report.

“For example, in a series of disastrous concessions, HMRC conceded its rights to withdraw activities from Aspire, to benchmark the contract prices against the market to determine whether they were reasonable,” says the report.

“It also gave up its right to share in any excess profits. In 2007, HMRC negotiated a three-year extension to the Aspire contract just three years after the contract was let, extending the end of the contract from 2014 to 2017.

“The Department has still not renegotiated the terms of the contract in line with a memorandum of agreement it signed in 2012 designed to separate Capgemini’s role in service provision from its role as service integrator and introduce more competition.”

Big or small IT suppliers?

The Aspire contract between HMRC and Capgemini is the government’s largest
technology contract. It accounts for for 84% of HMRC’s total spend on ICT.

Today’s report says that Aspire has delivered certainty and continuity over the past decade but HMRC now plans a change in IT strategy in line with the Cabinet Office’s plan to break up monopolistic contracts.

In 2010, the Cabinet Office announced that long-term contracts with one main supplier do not deliver optimal levels of innovation, value for money or pace of change.

In 2014, it announced new rules to limit the value, length and structure of ICT contracts. No contract should exceed £100m and no single supplier should provide both services and systems integration to the same area of government. Existing contracts should not be extended without a compelling case.

The Cabinet Office says that smaller contracts should allow many more companies to bid, including SMEs, and provide an increase in competition.

HMRC agrees. So it doesn’t plan to appoint a single main supplier when Aspire expires in 2017. But PAC members are worried that the switch to smaller contracts could jeopardize the collection of taxes. Says the PAC report:

“HMRC has made little progress in defining its needs and has still not presented a business case to government. Once funding is agreed, it will have only two years to recruit the skills and procure the services it will need.

“Moreover, HMRC’s record in managing the Aspire contract and other IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.

“HMRC also demonstrates little appreciation of the scale of the challenge it faces or the substantial risks to tax collection if the transition fails. Failure to collect taxes efficiently would create havoc with the public finances.”

The PAC recommends that HMRC “move quickly to develop a coherent business case, setting out the commercial and operational model it intends to put in place to replace the Aspire contract. This should include a robust transition plan and budget”.

Richard Bacon, a long-standing member of the PAC, said HMRC has yet to produce a detailed business case for the change in IT strategy.

“HMRC faces an enormous challenge in moving to a new contracting model by 2017, with many short-duration contracts with multiple suppliers, and appears complacent given the scale of the transformation required.

“Moreover, HMRC’s record in managing IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.”

Comment

The PAC has a duty to express its concerns. HMRC needs stable and proven systems to do its main job of collecting taxes. A switch from a single, safe contract with a big supplier to multiple, smaller contracts could be destablizing.

But it needn’t be. The Department for Work and Pensions is making huge IT – and organisational – changes in bringing in Universal Credit. That is a high-risk programme. And at one time it was badly managed, according to the National Audit Office. But the gradual introduction of new systems hasn’t hit the stability of payments to existing DWP claimants.

This is, perhaps, because the DWP is doing 4 things at once: running existing benefit systems, building something entirely new (the so-called digital service), introducing hybrid legacy/new systems to pay some new claimants Universal Credit, and is asking its staff to do some things manually to calculate UC payments. Expensive – but safe.

The DWP’s mostly vulnerable claimants should continue to be paid whatever happens with the new IT. So the risks of major change within the department are financial. The DWP has written off tens of millions of pounds on the UC programme so far, says the NAO. Many more tens of millions may yet be wasted.

But many regard the risks as worth taking to simplify the benefits system. It could work out a lot cheaper in the end.

At HMRC the potential benefits of a major change in IT strategy are enormous too. Billions more than expected has already been spent on having one main supplier tied into the long-term Aspire contract (13 years). Isn’t it worth spending a few tens of millions extra running parallel processes and systems during the transition from Aspire to smaller multiple contracts?

It could end up costing much less in the end. And running parallel new and existing systems and processes should ensure the safe collection of taxes.

If government departments are not prepared to take risks they’ll never change – and monolithic contracts and out-of-control costs will continue. Is there anything more risky than for HMRC to stay as it is, locked into Aspire, or a similar long-term commitment?

“Not all legacy benefit claimants will have moved to Universal Credit by the end of 2019.”

Assumptions are changing massively

“Universal Credit impacts depend on policy assumptions. For example, there was a £30 billion movement between 2011 and 2012 in the Department’s estimate of benefit spending, which went from a £19.7 billion cost to a £10.8 billion saving. The Department changed its methodology over this time but the size of this movement was largely due to changes in benefit entitlement and conditionality.”

Spending on existing UC systems questionable?

“HM Treasury has expressed concerns about the value for money of further investment in live service systems.”

What if the digital system fails?

“ Following the Major Projects Authority’s review, HM Treasury requested, in April 2014, the Department provide it with contingency plans should the digital service be delayed or fail. The Department is due to update HM Treasury at the end of November 2014 on its progress in developing such plans.”

The small print

You can claim Universal Credit if you:

– fall into one of the accepted groups

– do not own or part own your home;

– have a bank or building society account;

– do not live in temporary accommodation;

– are not pregnant or given birth within the last 15 weeks;

– are not a carer;

– are not self-employed;

– are unemployed or have household earnings of less than £330 per month if over 25 or £270 if under 25;

– are not challenging or awaiting a decision on Jobseekers Allowance, Housing Benefit, Employment and Support Allowance, Income Support or tax credits;

– are not staying away from your main home;

– are not responsible for a child or young person who is: adopted, fostered, being looked after, registered blind or have a disability benefit.

UC security

“In June 2012, CESG [the IT security arm of GCHQ) found that security had not been properly considered from the start. The [UC] systems were developed by multiple suppliers without an overarching plan for how it would work as a whole.

“A Red Team review concluded that the programme lacked appropriate detail around the security measures it needed because of: ineffective links between design and security teams; invalid assumptions being made by technical teams about what was acceptable to the business; a lack of balance between usability and security; poor understanding of dependencies between components; and little consideration of the technical implications of business design activities. The Department was unable to address these concerns prior to the reset in February 2013.”

A good approach to agile

“Since the reset (in 2013), the Department has concentrated its use of agile on developing digital service using a co-located, mixed-skill team. In June 2014, consultants commissioned by the programme board reported that a good agile approach is in place, and that a strong agile culture and organisation has been found inside the digital service.

“The consultants also found that a focus on long-term planning and effective communication of progress is required to drive scale and delivery, and that adjustments to the team structure will be required to ensure scalability…

“To remain on track, the Department will have 18 months to increase functionality to create a fully integrated service eventually capable of handling up to 10 million claimants. It will use an agile approach to do this. The Department plans to trial new systems in spring 2015, when it intends to start testing efficiencies and delivery against policy intent. It then plans to test increased capacity from November 2015.”

Not so agile

“…The Department will continue to use traditional approaches for buying and maintaining systems supplied commercially, such as existing Department‑wide systems and cloud hosting…”

Inaccurate payments

In April 2014, a software update [from a major supplier] created new problems for [UC] calculations and inaccuracy increased again. Between April and June 2014, over 10% of payments made to claimants were incorrect. This damaged staff and stakeholder confidence in the system and the Department had to reintroduce 100% manual checking of payments in June 2014 …

“… At present the Department is undertaking 100% checking of all payments before they go out.”

Better leadership

Confidence in the leadership team has improved despite continuing difficulties and the heavy demands on the programme director through 2014 caused by the limited availability of the senior responsible owner. A follow-up survey found a large increase in the number of staff expressing confidence in the actions of senior leadership (from 30% in 2013 to 75% in 2014) and an increase in the number of staff who feel that senior management encourages challenge and welcomes their suggestions (from 30% in 2013 to 70% in 2014).

Do major suppliers have too much control of DWP IT?

“The Department’s management of suppliers has been tested by the problems that emerged following an IT update in April 2014 designed to enhance live service. A supplier made significant changes in addition to the work that had been commissioned by the Department. It did not fully inform the Department of this, therefore the update was not adequately tested before it went live.

“The release caused an increase in payment errors described in Part Three. The supplier agreed to rectify the coding at its own expense. This delayed the next release by 2 weeks because of constraints on departmental and supplier resources, and the need to implement further controls recommended in a review commissioned by the Department after the April release.

“In November 2014, the Department’s internal audit reported that the programme has built technical capability to challenge, monitor and review supplier performance, including challenge of the management information provided.”

Manual interventions

“As planned, many processes in live service and digital service areas currently remain dependent on manual interventions.”

“Can the secretary of state confirm that the Treasury has now signed off the whole business case and laid to rest that fear that they were not going to do that?”

IDS gave a clear reply: “That is exactly what was being asked before the summer break and the answer is they have …”

But the UC programme has not received Treasury approval for the full business case, nor even the outline business case. Today’s National Audit Office report “Universal Credit: progress update” says that the UC programme received approval in September 2014 for the “strategic outline business case” only.

An NAO official says this is a “long way from Treasury approval” of the full business case.

Until the full business case is approved, UC has no formal funding beyond the current spending review. Meanwhile the Treasury has been funding UC in “small increments” according to the NAO.

The Department of Work and Pensions is due to produce the outline business case next summer, before the next government’s spending review.

The “outline” business case is supposed to set out how the programme is affordable and will be successfully delivered. It summarises the results so far and sets out the case for proceeding to a formal procurement phase.

The “full” business case documents the contractual arrangements,
confirms funding and affordability and sets out the detailed management
arrangements and plans for successful delivery and post evaluation.

The absence of approval for the outline or full business case underlines the uncertainties still in the UC programme. Indeed the latest NAO report says it’s too early to tell whether UC will prove value for money.

But the DWP has reduced risks by extending the roll-out. The programme is now not expected to be completed before 2020. The original completion date was 2017.

The DWP has a twin-track approach to the UC IT programme. It is paying its existing main IT suppliers to support the introduction of UC – the so-called “live” service – while an agile team develops a fully-automated “digital” service that is designed to do all that the “live” service cannot do without manual intervention.

The agile system has yet to be tested – but it has cost only about £8m compared with more than £90m spent on the “live service”.

Porkies?

Labour MP Glenda Jackson, who is a member of the Work and Pensions committee, suggested to IDS yesterday that his promises to MPs on Universal Credit’s roll-out have all been broken and that he has told the House of Commons “porky pies”.

IDS replied that his intention is to ensure that UC is rolled out in a safe and secure way.

Comment:

You’d never know from IDS’s replies to MPs yesterday that the Universal Credit programme doesn’t yet have either outline business case approval or full business case approval.

In other words, the Treasury has yet to be convinced the UC programme is feasible or affordable. It is paying for the programme in increments.

IDS told MPs the programme has business case approval. He did not make it clear that the programme has the early-stage strategic outline business case approval.

His comments reinforce the need for the National Audit Office to scrutinise the Universal Credit programme. Left to the Department for Work and Pensions, the facts about the programme’s progress, problems and challenges would probably not emerge, not in the House of Commons at least.

Some MPs have said for years that Parliament is the last place to look for the truth.

IDS also said yesterday that the original deadline for completion of UC by 2017 was “artificial” – though he has quoted the 2017 date to MPs on several occasions.

Will UC succeed?

UC as an IT-based programme is not doing too badly, to judge from today’s NAO report.

Indeed it seems that the Department for Work and Pensions, when under intense scrutiny, can start to get things right.

Though existing systems from major suppliers look increasingly unlikely to be able to handle the predicted volumes without a large and expensive amount of manual intervention, the agile digital system, though delayed by 6 months, looks promising, at a fraction of the cost of the conventional “live” system.

Scrutiny

The NAO is scrutinising the programme. The DWP’s own auditors seem to be doing a good job. The Cabinet Office’s Major Projects Authority is making useful recommendations. And the programme has an independently-chaired board. [The NAO says the programme board has been hampered by limited information and suggests this is because the DWP gives the board “good news” statements rather than facts.]

All this scrutiny is powering the programme in the right direction, though the uncertainties remain massive. As Campaign4Change predicted, the programme will not be complete before 2020. But who cares, if it works well in the end and losses are minimised?

DWP officials are learning lessons – and UC could end up as a template for big government IT-enabled programmes The twin-track approach of using existing suppliers to deliver support for major business changes that yield problems and lessons that then feed into an entirely new agile-based system is not a cheap way to develop government IT – but it may work.

What DWP officials have yet to learn is how to be open and truthful to Parliament, the media – and even its own programme board.

Iain Duncan Smith has told MPs that the costs of the Universal Credit project are £652m to March 2014 – which is about £36,222 per successful claimant.

The figure includes the money paid to the DWP’s Universal Credit IT suppliers which was £303m by the end of 2012/13. An updated figure will be published in a UC report by the National Audit Office due to be published near the end of this month.

The costs of Universal Credit per successful claimant are disproportionately high for an IT-enabled programme that has been running for more than three years because numbers on the system are small.

If the UC programme were complete, at a forecast cost of £1.8bn, and the predicted 7.7 million people were receiving the benefit, the scheme’s delivery costs per claimant would be only about £234.

Total delivery costs for the programme are expected to be £1.8bn, down from an original prediction of £2.4bn, IDS told the committee.

IDS and the DWP hope many more successful claimants will be added to the systems next year when Universal Credit is rolled out to all jobcentres and local authorities across the country. But the scheme is subject to growing uncertainties, as the DWP’s permanent secretary Robert Devereux and IDS made clear to the committee.

DWP drops firm end date for UC

When an MP put it to IDS that he no longer has a concrete end date for when 7.7 million people will be on UC, he paused. Then he said the plan was for UC to be complete “by the end of 2018”. He gave no commitment and did not deny that there is no concrete end date.

“Er yes, yeah,” replied IDS. “We do envisage UC being complete by the end of 2018. That’s our plan.” He said that UC would handle singles, couples, then families. In the meantime the DWP is developing an “end-state digital process” that will deliver benefits for claimants and the departments.

“The roll-out gives us phenomenal understanding of what we need to do to make sure the digital service ultimately comes in and completes that process properly. There is a de-risking of the process.”

Robert Devereux, permanent secretary at the DWP, told the committee that the UC systems are, for some claimants, part manual, part automated. Devereux said:

“The peculiar nooks and crannies with individual circumstances – we have deliberately not tried to code every permutation as we go along. We are trying to make sure it can be safely delivered within costs in a sensible fashion.

“It would not be sensible to code every possible permutation back at the start while you are still learning. There are different elements of the system, some of which will be [digital] all the way through, some which are not.”

The committee chair Dame Anne Begg questioned whether UC will ever work effectively if manual processing is applied to some of the 7.7 million claimants. She received no clear answer.

Comment

It’s a good thing that the DWP is going slowly and cautiously but a spend of £652m to March 2014 per UC recipient does not seem cautious at all. If the project is being run on agile principles of fail early and fail cheaply, can this sum be justified?

On a more positive note IDS has stopped quoting a firm end date for UC. At first the DWP was saying UC would be completed by the end of 2017, then IDS said the programme would be “essentially complete” by the end of 2017. Now he is saying it may be complete by the end of 2018 but is giving no commitment. His caution is probably because the NAO’s update on UC later this month will suggest that the programme is unlikely to be delivered in any certain time period. Nobody can say with authority or credibility when UC’s implementation will be complete.

It’s also a good thing that the DWP is conceding that UC can never be fully automated. It doesn’t make sense spending disproportionate sums on automating calculations that can be done more cheaply by hand. But if the exceptions prove the rule UC could prove much more expensive to implement than planned.

UC is a good idea in theory but the next government needs to do a full review of its financial and practical feasibility, which the present government is unlikely to do.

An excellent BBC Radio 4 “Inside Welfare Reform” Analysis broadcast yesterday evening gave an insider’s view of the IT-based Universal Credit programme from its beginnings to today.

It depicted Iain Duncan Smith as a courageous reformer who’s kept faith with important welfare changes that all parties support. If they work, the reforms will benefit taxpayers and claimants. The broadcast concludes with an apparent endorsement of IDS’s very slow introduction of UC.

“When real lives and real money are at stake, being cautious is not the worst mistake you can make.”

So says the BBC R4 “Analysis” guest presenter Jonathan Portes who worked on welfare spending at the Treasury in the 1980s and became Chief Economist at the Department for Work and Pensions in 2002. He left the DWP in 2011 and is now director at the National Institute of Economic and Social Research.

The BBC broadcast left me with the impression that UC would today be perceived as meeting expectations if DWP officials and ministers had, in the early days:

– been open and honest about the complexities of IT-related and business change

– outlined the potential problems of implementing UC as set out in internal reports and the minutes of programme team meetings

– explained the likelihood of the UC programme taking more time and money than initially envisaged

– urged the need for extreme caution

– made a decision at the outset to protect – at all costs – those most in genuine need of disability benefits

– not sold UC to a sceptical Treasury on the basis it would save billions in disability claims – for today thousands of disability claimants are in genuine need of state help, some of whom are desperately sick, and are not receiving money because of delays.

– The Department for Work and Pensions gave selective responses to the BBC’s questions. Portes: “We did ask the Department for Work and Pensions for an interview for this programme but neither Iain Duncan Smith nor any minister was available. We sent a detailed list of questions and have had answers to some.”

– Margaret Hodge, chairman of the Public Accounts Committee, gave her view that the next government will have to write off £500m on IT investment on Universal Credit – about £360m more than the Department for Work and Pensions has stated publicly.

Hodge told the BBC: “We are now on our fourth or official in charge of the project and the project has only been going four or five years. Anyone who knows about project management will tell you that consistency of leadership is vital. I don’t think there has been ownership of the project by a senior official within DWP. I think they and ministers have only wanted to hear the good news. Management of the IT companies has been abysmal.

“I still believe, though I haven’t t got officials to admit to this, that after the general election we will probably be writing off in excess of half a billion pounds on investment in IT that had failed to deliver… The investment in IT that they are presently saying they can re-use in other ways is not fit for purpose. The system simply cannot cope.”

The BBC asked the DWP for its comment on the scale of the write-offs. “No answer,” said Portes.

Parliament told the truth?

Stephen Brien, who has been dubbed the architect of Universal Credit, gave his first broadcast interview to Analysis. He worked with IDS at the Centre for Social Justice, a think tank set up by IDS in 2004. Brien saw IDS on a nearly daily basis.

Portes asked Brien when IDS first realised things were going off track. “The challenge became very stark in the summer of 2012,” said Brien.

Portes: What was your relationship with IDS?

“My office was across the corridor from his. I would join him for all the senior meetings about the programme. I would keep him updated as a result of the other meetings I was addressing within the programme team. When it became materially obvious we had to change plans it was over that summer [2012].

Portes: But that was not the public line. In September 2012 this is what IDS said (in the House of Commons):

“We will deliver Universal Credit on time, as it is, on budget, right now.”

IDS appears to have given that assurance while being aware of the change to UC plans.

UC oversold to Treasury?

Portes: “The really big savings were supposed to come from disability benefit. And here trouble was brewing. The problem was the deal IDS had done with the Treasury. The Treasury never liked UC. It thought it was both risky and expensive. And the Treasury, faced with a huge budget deficit, wanted to save not spend.

“With pensions protected disability benefits were really the only place savings could be made. The previous government had contracted ATOS to administer a new medical test – the Work Capability Assessment – to all 2.5 million people on Incapacity Benefit but only a few pilots had started.

“IDS and the Treasury agreed to press ahead. Some claimants would be moved to new Employment and Support Allowance but the plan was that several hundred thousand would lose the benefit entirely – saving about £3bn a year.

“Disability living allowance which helps with the extra cost of disability would also be replaced with the new, saving another £2bn…

But …

“By now the new work capability assessment was supposed to have got more than 500,000 people off incapacity benefits. Instead they are stuck in limbo waiting for an assessment.

“By now the new Personal Independence Payment should have replaced disability living allowance saving billions of pounds more. Instead it too has been dogged by delay.

“Just a few days ago the Office for Budget Responsibility said delays in these benefits are costing taxpayers close to £5bn a year. This dwarfs any savings made elsewhere and leaves a potential black hole in the next government budget.”

How many people left stuck in the system?

The BBC asked the Department of Work and Pensions’ press office how many claimants, and for how long, they have been waiting for claims to be resolved. Portes: “They didn’t answer. But their own published statistics suggest it is at least half a million.

“One aim of the reforms was to cut incapacity benefit and the numbers had been on a long slow decline between 2003 and 2012 but now it is rising again. So much for the Treasury saving.”

Who is at fault?

Publicly IDS talks about a lack of professionalism among civil servants and that he has lost faith with their ability to manage the UC-related problems. Rumours in the corridors of Westminster are that behind the scenes IDS has attempted to blame his permanent secretary Robert Devereux. On this point, again, the DWP refused the BBC’s request for a comment.

Gus O’Donnell, former head of the civil service, who appointed Devereux, told the BBC that tensions between IDS and Francis Maude at the Cabinet Office did not help. “Robert [Devereux] was in a very difficult position. He was in a world where Francis Maude was trying to deliver, efficiently, programmes for government and on the other hand IDS was seeing the centre as interfering and criticising whereas he knew best: it was his project; he was living it every day. There was a lot of tension there. Really what we need to do is get everyone sitting round a table trying to work out how we can deliver outcomes that matter.”

Was Devereux set up to fail?

O’Donnell: “With hindsight one can say this is a project that could not be delivered to time and cost.”

Were DWP officials to blame?

Stephen Brien said: “There was a real desire from the very beginning to get this done. I think there was a desire within DWP to demonstrate that it could again do big programmes. The DWP had not been involved in very large transformation programmes over the previous decade. There was a great enthusiasm to get back in the saddle, a sense that it [UC] had to get underway and it had to be well entrenched through Parliament.

“These forces – each of them – contributed to a sense of ‘we have got to get this done and therefore we will get this done.’”

Too ambitious?

Richard Bacon, a member of the Public Accounts Committee, told the BBC: “If you know what it is you want to do and you understand what is required to get there, then what’s wrong with being ambitious?

“The trouble is that when you get into the detail you find you are bruising people, damaging people, people who genuinely will always need our help. Taxpayers, our constituents, expect us to implement things so that they work, rather than see project after project go wrong and money squandered.

“There may come a point where we say: ‘we have spent so much money on this and achieved so little, is the game worth the candle?’”

Thank you to Dave Orr for drawing my attention to the Dispatches documentary.

Journalists who are trying to find out the current state of the Universal Credit programme will get little help from the Department for Work and Pensions unless its press officers sense that the eventual outcome will be positive.

Sometimes journalists call me as part of their research. They want to know whether UC will end up as another government IT disaster. I had such a call yesterday.

The conversation focused on IT. But it’s a maxim in the industry that major change programmes in the public sector usually fail or are delayed for managerial rather than technical reasons.

The introduction of a new passport system failed when a better, more secure system slowed down the issuing of new passport applications.

Instead of halting the roll-out to see how to speed up the issuing of passports – by changing procedures or spending more on staff and equipment – the Home Office continued the rollout and chaos ensured. That wasn’t the fault of the IT.

It may be a similar story with Universal Credit. Even if the IT as far as it goes works well, claims handling is a laborious process, The main systems do not handle calculations of gross income, net income or back-office integration, all of which are managed manually.

Chaos is unlikely because the rollout is going so slowly. But the amount of manual intervention required means the slow rollout is enforced rather than merely voluntary.

[This slow rollout is despite an IT budget for UC including migration costs from 2010 to 2014/15 of £812m as at December 2012. Within this budget, £303m had been spent to March 2013, mostly with the DWP’s main IT suppliers Accenture, IBM, HP and BT.]

The programme is also running into non-IT difficulties such as delays in issuing first-time payments to claimants because of a variety of reasons around the complexity of new procedures, and tenants unable to pay rent because the money hasn’t gone directly to landlords.

If UC goes nationwide, as Iain Duncan Smith says it will next year, it will still be able to handle only limited numbers of claimants, in the tens of thousands, not hundreds of thousands and certainly not millions.

This article is a reminder that Universal Credit faces problems that go beyond the IT. A North West housing association said a survey of its tenants had exposed flaws in the universal credit system, with some claimants turning to pay day lenders to get by.

After taking part in a pilot in 2013 of the roll out of UC, First Choice Homes Oldham found that their tenants had suffered “multiple frustrations and complications with the system”. Data collected this summer from 40% of the housing association’s tenants on UC found that:

• 55% found the period between making their UC claim and receiving their first payment very difficult. 44% managed financially by borrowing and 18% had taken out a pay day loan.

• 74% had not been offered personal budgeting support by the Department for Work and Pensions. However, 57% of the tenants that were offered this service took up the offer.

• 37% did not receive their payment on the same day each month, making budgeting even more difficult.

• 59% of tenants had not found work since claiming UC.

When asked by FCHO to name the first three bills that would be paid once they were in receipt of UC, 19% of tenants did not name rent as a priority bill.

So will UC succeed?

It’s laudable that the coalition is trying to simplify the benefits system. No pain no gain. But it’s not doing it openly. IDS pretends all is well when clearly it isn’t.

This means that UC becomes an impossible project to manage well. No programme leader can take big problems to IDS because big problems are not supposed to exist. UC desperately needs a new political leader who has no emotional equity in its success.

It’s right (and largely involuntary) that the DWP is going slowly in rolling out UC. This way chaos is avoided.

But to handle millions of claims, the processing of UC transactions and payments needs to be a fully automated process. The DWP is working on that – what Iain Duncan Smith calls an “enhanced digital service”. Nobody seems to know much about it. IDS says it is going to be tested later this year.

Uncertainty

Now into its fourth year of implementation, UC is still mired in uncertainty, despite IDS’s self-confident remarks at the Tory conference.

The facts are likely to emerge when the National Audit Office publishes its updated report which is expected before the end of this year. The DWP may already have drafted its press release saying the NAO report is outdated, which is part of the problem with UC and other big government IT-based programmes: they are more governed by politics than pragmatism.

Mitchell is quoted in Government Computing as saying that it would be irresponsible for a Labour government to continue spending large amounts of money on Universal Credit without getting answers to important questions such as:

Is there a comprehensive business case – one that clearly outlines the expected benefits, demonstrating that the Universal Credit project is viable?

Is the business case agreed by all stakeholders?

Is there clarity about what needs to be achieved?

Is there a stable specification explaining exactly how the new processes will work and how they will be automated?

Is the project being managed and staffed by people and organisations with appropriate levels of experience, track-record and expertise, all of whom are capable of delivering the benefits of the project and ensuring safe roll-out in a timely manner?

Is the project fully under control?

Can it absorb the changes demanded by a new incoming Government? If not, can the project be brought under control at an acceptable cost with respect to the business case, through a re-planning exercise?

Once such a re-planning exercise is completed, are we convinced that it was successful and that the project will now proceed to a satisfactory completion in a controlled fashion?

Are there appropriate “control gates” in place to ensure that all aspects of each phase of the plan are fully completed (and that projected costs to completion preserve the business case) before allowing the project to move safely onto each next stage?

Mitchell said, “Universal Credit is one of those applications that might look straightforward when you first look at it, but this is most definitely not the case. I believe there are significant process and technical challenges to overcome.”

Comment

Good questions, most of which the Department for Work and Pensions is unlikely to be able to answer satisfactorily today.

The Treasury still hasn’t approved the full business case, which is odd for a project that started in earnest more than three years ago.

It’s hard to see, given the rate of progress, the amount of work being completed manually, the lack of integration with legacy systems, the complexity of changes of behaviour required, the reliance on other parties such as local authorities, the inflexibility of some supplier contracts, regularly changing project leadership, the variable performance of HMRC’s RTI systems, and the DWP’s poor history of success on big IT-related projects, how the UC programme will be completed before 2020 whoever wins the next election.